Oh, What a Feeling! Toyota!
“Things are going to get a lot worse, before they get worse.”- Lily Tomlin
Toyota keeps getting pummeled. I haven’t seen a beating this bad since Cooney vs. Holmes. The latest to pile on is U.S. Transportation Secretary Ray LaHood. Secretary Hood said today at a House Appropriations committee that drivers of vehicles that are affected by the Toyota recall should “Stop driving it and take it to a Toyota dealer.”
The bad news continues for Toyota. Earlier this week, the company stated that their “sticky” accelerator issue would be fixed by having dealerships install shims in the accelerator. However, LaHood stated today that the US government is investigating to see if the cause of the problem is in fact the electronic throttle system. According to Bloomberg news, the electronic throttle system is the cause of at least 7 law suits.
It is a BAD week to be a Toyota stock holder.
Toyota was trading around $95 a share as recently as January 19th. Today’s intraday low was $71.90. Granted, the overall market place has also experienced higher volatility and lower prices in the past 2 weeks, but Toyota has been selling off faster than the overall market. Toyota had also traded down on very heavy volume days.
What does all of this mean for Toyota?
In the short run, it means plants will be continue to be temporarily shut down and Toyota dealerships will suffer a drop in sales until the accelerator issue can be resolved. In the long run, Toyota’s recovery from this issue will depend on how much tarnish this incident has laid upon Toyota’s pristine image? However, it is still too early in the process of events to determine that.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aB10av6WnlME&pos=1